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Analysis of the Intensity of Burundi's Rice Imports from Tanzania

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Analysis of the Intensity of Burundi's Rice Imports from Tanzania Asian Journal of Agricultural Extension, Economics & Sociology 38(2): 111-119, 2020; Article no.AJAEES.55639 ISSN: 2320-7027 Analysis of the Intensity of Burundi’s Rice Imports from Tanzania J. C. Ndayisaba1*, J. K. Lagat1, W. M. Ndayitwayeko2 and S. K. Kiprop3 1Department of Agricultural Economics and Agribusiness Management, Egerton University, P.O.Box 536, Egerton-20115, Kenya. 2Department of Rural Economics, University of Burundi, Burundi. 3Department of Economics, Egerton University, P.O.Box 536, Egerton-20115, Kenya. Authors’ contributions This work was carried out in collaboration among all authors. Author JCN designed, wrote the first draft of the manuscript and performed statistical and econometric analysis. Author WMN revised and improved the statistical and econometric analysis. Authors JKL and SKK revised the whole manuscript and improved it before its submission. All authors read and approved the final manuscript. Article Information DOI: 10.9734/AJAEES/2020/v38i230317 Editor(s): (1) Dr. Roxana Plesa, University of Petrosani, Romania. Reviewers: (1) Paul Kweku Tandoh, Kwame Nkrumah University of Science and Technology, Ghana. (2) Hussin Jose Hejase, Al Maaref University, Lebanon. Complete Peer review History: http://www.sdiarticle4.com/review-history/55639 Received 18 January 2020 Accepted 22 March 2020 Original Research Article Published 04 April 2020 ABSTRACT Neighboring countries usually exchange goods and services, taking advantage of proximity and other shared socio-economic characteristics among citizens. This study explored the intensity of Burundi’s rice imports from Tanzania. First of all it determined and analyzed the evolution of the intensity of rice imports. Secondly, it estimated the factors which influence the intensity of rice imports. The results indicated that Burundi’s rice imports from Tanzania remained more intensive over 2003-2018. However the financial crisis which slapped the world in 2007-2008 harmed Burundi’s rice imports from Tanzania probably due to lack of finance to import. Moreover, the results revealed that the Burundian national income, its exchange rate and its trade openness significantly had a positive effect on the intensity of Burundi’s rice imports from Tanzania. Keywords: Imports; neighboring countries; intensity of trade; food trade. _____________________________________________________________________________________________________ *Corresponding author: E-mail: [email protected]; Ndayisaba et al.; AJAEES, 38(2): 111-119, 2020; Article no.AJAEES.55639 1. INTRODUCTION neighboring countries located in the eastern part of Africa. Burundi is a landlocked country Around the world, food trade considerably bordering with Rwanda in North, Democratic contributes to the improvement of citizens’ Republic of the Congo in West and Tanzania in welfare. Through trade, food commodities are both East and South sides. Burundi was self- exchanged from countries with surplus to sufficient in food production before 1990’s [5]. countries challenged with food shortage. This Nevertheless, the civil war which struck the results in enhanced food supply leading to country over the period 1993-2005 reduced the sustainable food access in countries involved in output from all sectors, agriculture included. trade. Salvatore [1] indicates that we live a Since then, Burundi relies on imports to offset its globalized world where tastes converge and deficit in domestic food needs. As an illustration, goods and services we usually use are provided Table 1 provides a view of the balance between by foreigners. Therefore, food trade’s existence Burundi’s exports and imports in selected food matters more in order to ease a smooth access commodities suchlike cereals, meats products to food commodities and hence improve the and dairy products for the period 2010-2015. welfare of citizens. From Table 1, it is evident that Burundi faces a Empirical studies pointed out that international deficit in the mainly consumed food commodities. trade benefits all countries and this leads to a In such a situation, imports step in to offset that sustainable development across nations. existing deficit. In Burundi, food commodities are Marshall [2] indicates that the causes which imported from neighboring countries, from the determine the economic progress of nations region and from the rest of the world mostly Asia belong to the study of international trade. and/or Europe. This study was meant to explore Examining the existing nexus between trade and Burundi’s rice imports from Tanzania using an economic growth, Robertson [3] described intensity of trade approach. More specifically, this exports as an engine of growth and Minford et al. study firstly determined the intensity of Burundi’s [4] hailed foreign trade as an elixir of economic rice imports from Tanzania. Thereafter, it growth.Therefore, no matter how far countries estimated the factors which influence the are located from each other, still exchange of intensity of rice imports. The broad aim of this goods and services takes place and benefits to study was to contribute towards improved all countries involved in trade. Trade existence performances of Burundi’s rice imports from among nations is triggered by the phenomenon Tanzania. This study covered the period 2003- of globalization which intensifies day after day 2018 due to data availability. particularly in open economies. Tanzania was chosen over other neighboring Countries facilitate trade by partially or definitely countries with Burundi reason being that it removing tariffs and other non-tariffs barriers shares a large physical border with Burundi (from which are perceived to significantly hamper the East to South), with many entry points along the movement of goods and services between them. shared physical border. This is perceived as a Likewise, neighboring countries usually trade comparative advantage as far as imports and/or each other and establish some forms of exports are concerned. Rice was chosen among agreements easing trade between them. It is in other food commodities due to the existing high this context that this study sought to analyze rate of rice consumption in Burundi caused by a trade in rice between Burundi and Tanzania, two sporadic increase in number and extension of Table 1. Burundi’s total imports and exports (in 1000$) for cereals, meat products and dairy products and eggs in 2010-2015 Year Imports Exports Balance Cereals Dairy Meat Cereals Dairy Meat products and products products and products eggs eggs 2010 27031.222 1850.546 74.238 829.249 4.596 0.000 Deficit 2011 47764.465 4133.476 46.174 392.610 0.000 0.000 Deficit 2012 100870.933 2651.12 56.528 5.285 0.989 0.000 Deficit 2013 47230.166 1937.866 103.596 2915.713 25.125 3.317 Deficit 2014 42276.060 1905.181 4811.558 4807.307 0.675 2.704 Deficit 2015 28756.55 1249.992 3105.931 5636.861 0.172 0.006 Deficit Source: UNCOMTRADE, 2019 112 Ndayisaba et al.; AJAEES, 38(2): 111-119, 2020; Article no.AJAEES.55639 urban centres. In Burundi, there are few theory indicates that trade takes place between empirical studies related to food trade which countries with the same level of development. have been carried out so far. Empirical studies The similarity can be seen in the aspects of done are more general and did not use the location, culture, political and economic interests intensity of trade approach, to analyse trade and natural resources among other aspects. The flows between Burundi and Tanzania as far as relevance of this theory in the context of this rice imports are concerned. Thus, this study was study lies in the fact that the countries involved in meant to bridge that gap left by previous this study (Burundi and Tanzania) share many empirical studies. The results of this study firstly features and this makes them to be similar in a provided relevant quantified information to policy way or another. makers in Burundi and Tanzania. Such information could be more useful while Some empirical studies conducted on the drivers addressing an issue related to rice demand and of the intensity of trade are oriented at firm-level. supply across the two neighboring countries. As an illustration, we can mention Schlegelmilch Secondly, the results feed into existing literature and Crook [9] who estimated the determinants of on bilateral trade between neighboring countries. export intensity at firm level. Their study employed a multiple regression analysis and 1.1 Overview of Production, Consump- found out that the export intensity is negatively tion and Imports of Rice in Burundi related to the domestic growth of sales. Seyoum [10] explored the determinants of import intensity There are three ecological zones in Burundi in US foreign trade zones. Factors affecting where rice is grown: the irrigated Imbo plain, the import intensity were categorized into three rain fed (non-irrigated) areas of Imbo and Moso groups suchlike external factors, firm lowlands and the non-irrigated areas of the characteristics and firm business strategy. elevated marshland region [6]. Concerning Findings reveal that the most promising rice consumption in Burundi, the rate followed predictors of import intensity of firms operating in an upward trend in these years. Rice is USA free trade zones are the policy environment consumed by households and mostly by in the form of inverted tariff benefits and firm communities suchlike military camps, schools, business strategy. Other empirical studies prisons and religious communities. In oriented at country level were carried out so far. households, preferences depend on household This is the case of Elmorsy [11] who analysed income. Nzeyimana [7] indicates that the the determinants of trade intensity of Egypt with demand for rice has increased for about 70 % in COMESA countries. Both the intensity of trade 2013 and registered a peak in 2010. and the gravity model was used. Findings show that the gross domestic product was the main Although there is a sporadic increase of rice factors which affect the intensity of trade demand in the country, domestic rice production between Egypt and COMESA countries.
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